In Nigeria’s foreign exchange market demonstrated renewed resilience in June as the naira maintained a firm position against the United States dollar despite facing tighter liquidity conditions within the domestic financial system. The local currency recorded a modest appreciation during the month, reflecting growing confidence in the country’s foreign exchange market and highlighting the effectiveness of policy measures implemented by the Central Bank of Nigeria (CBN). The latest report released by the Financial Markets Dealers Association (FMDA) indicates that stronger foreign exchange inflows, increased market participation, and sustained interventions by the apex bank played a significant role in stabilising the naira even as demand for foreign exchange intensified.
According to figures published by the Central Bank of Nigeria, the naira has continued to recover from its recent lows. After weakening to N1,383.63 against the dollar on June 29, 2026, the currency rebounded to close at N1,370.15 per dollar on the Nigerian Electronic Foreign Exchange Market (NEEM). This represents an appreciation of N13.48 or approximately 0.98 percent, signalling renewed stability within the official foreign exchange market. On a day-to-day basis, the naira also strengthened, appreciating by N2.26 after the dollar was quoted at N1,370.15 on Thursday compared with N1,372.41 recorded on Wednesday.
The performance of the local currency came at a time when domestic liquidity conditions were becoming increasingly tight. Normally, such conditions would place additional pressure on the exchange rate as businesses and investors seek greater access to foreign currencies. However, the combination of improved foreign exchange supply, stronger market activity, and timely interventions by the Central Bank helped absorb these pressures, preventing significant depreciation of the naira.
The FMDA’s June market report revealed that the naira appreciated by 0.22 percent within the Nigerian Foreign Exchange Market (NFEM) during the month under review. This gain was achieved despite aggressive liquidity sterilisation measures undertaken by the Central Bank, as well as rising foreign exchange demand towards the closing weeks of June. The association noted that although pressure on the local currency increased, market fundamentals remained sufficiently strong to support exchange rate stability.
One of the major factors contributing to the temporary pressure on the naira was the maturity of privately held Open Market Operation (OMO) bills. As these financial instruments matured, investors sought to convert a portion of their proceeds into foreign currency, thereby increasing demand within the foreign exchange market. Under normal market conditions, such an increase in demand could have weakened the naira significantly. However, the Central Bank’s strategic interventions, combined with improved foreign exchange liquidity, ensured that supply remained adequate to meet market needs.
Market activity also expanded considerably throughout June, providing further evidence of increasing investor confidence in Nigeria’s official foreign exchange market. Total market turnover rose by approximately 45 percent to exceed $12.9 billion during the month. The significant increase in trading volume reflected stronger participation from authorised dealers, institutional investors, exporters, and other market participants. Higher turnover also suggests that liquidity within the official market improved substantially, reducing the gap between demand and available foreign exchange.
DDM News understands that this improvement in market liquidity has become one of the key drivers supporting exchange rate stability. With more participants actively trading within the official market, pricing has become more efficient while confidence among both domestic and international investors has strengthened. Analysts believe that sustained liquidity remains essential for preserving stability in Nigeria’s foreign exchange market, particularly as global economic uncertainties continue to influence capital flows across emerging economies.
Beyond the improvements recorded within the foreign exchange market, Nigeria’s external reserve position also showed encouraging signs of growth during the review period. According to the FMDA report, the country’s average external reserves increased by 4.09 percent to reach approximately $50.68 billion. The increase reflects sustained foreign exchange inflows into the economy, supported largely by crude oil exports, improved petroleum production, and expanding earnings from refined petroleum products.
The association further projected that Nigeria’s external financial position could strengthen even more in the coming months. Based on current market trends, the country’s current account surplus, which stood at $4.98 billion during the first quarter of 2026, is expected to increase to approximately $6.12 billion once second-quarter figures become available. Such an improvement would reinforce Nigeria’s external buffers while providing additional support for the naira and the broader economy.
According to FMDA, several favourable developments are expected to contribute to this anticipated improvement. Among them are stronger crude oil production levels, relatively favourable international crude oil prices throughout most of the second quarter, and sustained earnings generated from refined petroleum exports. These factors continue to strengthen Nigeria’s foreign exchange earnings, thereby improving the country’s ability to finance imports, build external reserves, and maintain confidence in the domestic currency.
Although global oil prices experienced some moderation during June, the report maintained an optimistic outlook for Nigeria’s external sector. Average Brent crude prices declined by 17.91 percent to approximately $84.38 per barrel during the month. The decline was largely attributed to easing geopolitical tensions in the Middle East, particularly following progress towards a peace agreement between the United States and Iran, alongside broader efforts aimed at reducing regional conflicts.
Despite the decline in crude prices, analysts noted that current oil price levels remain sufficiently attractive to support Nigeria’s export earnings. The country’s fiscal revenues, current account balance, and external reserves continue to benefit from oil prices remaining above historical averages. Furthermore, lower geopolitical tensions have contributed to easing pressure on global energy markets, creating conditions that may support lower inflation across many economies while preserving healthy export revenues for major oil-producing nations like Nigeria.
The report explained that the gradual easing of tensions in the Middle East could have broader implications beyond energy markets. Reduced geopolitical risks often encourage greater investor confidence, improve global financial market stability, and reduce uncertainty surrounding international trade. For Nigeria, these developments may contribute to stronger foreign capital inflows and greater stability within the foreign exchange market if current trends are sustained.
DDM News gathered that financial market analysts remain cautiously optimistic about the outlook for the naira during the second half of the year. While the recent performance of the local currency has been encouraging, experts believe that maintaining stability will require continued policy discipline, adequate foreign exchange supply, and prudent management of external reserves. The Central Bank’s ability to sustain interventions when necessary will remain an important factor in preserving confidence within the market.
Looking ahead, the Financial Markets Dealers Association expressed confidence that improving external reserves, stronger foreign exchange liquidity, and healthy trading activity should continue to support Nigeria’s macroeconomic stability. The association believes these developments will contribute positively to asset quality within the financial sector while strengthening investor confidence across the broader economy.
However, the report also advised market participants not to overlook potential risks that could influence future market performance. It identified fluctuations in international crude oil prices, changes in global monetary policy, and persistent domestic inflationary pressures as key variables that require close monitoring. Any significant shift in these indicators could affect foreign exchange inflows, investor sentiment, and ultimately the stability of the naira.
For now, however, June’s performance offers encouraging evidence that coordinated monetary policy measures, stronger foreign exchange inflows, improved market participation, and resilient external reserves are providing meaningful support for Nigeria’s currency. As policymakers continue efforts to deepen reforms and strengthen market confidence, the resilience displayed by the naira serves as a positive signal for businesses, investors, and the wider Nigerian economy.
